iZettle Launches Card Service in Mexico

iZettle AB, a Stockholm-based service that allows small companies to take payments on mobile devices, is launching in Mexico Tuesday, the first time the company has operated outside Europe.

The service is also launching a card reader that accepts cards with either a magnetic stripe (typically found in the U.S.) or those with a built-in chip that are authorized by signature. Cards in Europe mainly feature chip-and-PIN authentication.

According to iZettle’s CEO, Jacob De Geer, the move into Mexico follows the recent announcement that Spain’s Banco Santander SA had made a strategic investment of €5.2 million ($7 million) in the company. Santander will distribute the smartphone devices through its branch network in Mexico. “We would not have tried to go into Mexico by ourselves,” Mr. De Geer said.

He said iZettle had been working on the Mexico launch for more than eight months, and was planning further expansion in other markets outside Europe.

He wouldn’t say which countries would be next, or when, but Santander has significant operations in Brazil, Mexico, Chile, and Argentina. It operates in the U.S. as Sovereign Bank NA, a wholly owned subsidiary.

Mr. De Geer said Mexico had 125 million cards for a population of 112 million, of which 95% were chip-enabled cards.

Merchants in Mexico will pay a 3.75% fee for payments made using a chip card and 4.75% for magnetic-stripe cards. iZettle charges 2.75% in Europe. Mr. De Geer said the higher charges in Mexico reflected higher costs.

Unlike Europe, where chip cards are authorized using a PIN code that requires a special number pad, Mexico, like many other regions of the world, uses chip-and-sign. The new device will let merchants accept either magnetic-stripe or chip-and-sign cards.

iZettle launched in 2010 in the Nordic region before expanding into the U.K., Germany and Spain.

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